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07-22-2005 EDAMHutchinson EDA Board of Directors Minutes of Meeting Friday, July 22, 2005 at 7:00 a.m. Members present in bold print: Members: Tim Ulrich Steve Jansick Jim Haugen Duane Hoversten Casey Stotts Mike McGraw Staff: Miles Seppelt, EDA Executive Director Erin Eberdt, EDA Assistant L Tim Ulrich called the meeting to order at 7:04am. II. Approve Agenda No action taken III. Review and Approve Meeting Minutes a. Review minutes from June 24th EDA Board Meeting Don Walser M/S /P: Hoversten /Stotts to approve the minutes from the June 24th EDA Board meeting as written. Passed unanimously. b. Review minutes from June 15th Finance Team Meeting M/S /P: Jansick/Hoversten to approve the minutes from the June 15th Finance Team Meeting as written. Pass unanimously. IV. Review June Financial Statements -Ken Merrill Miles Seppelt gave the following report: o On Pg 1 under operations for the EDA, there is $67,848 cash on hand. The total fund balance as of June 30, 2005 is $67,974. There is the continuation of the land write down. Total Mortgages receivable is $90,238. o Pg 2 and 3 is the statement of revenue and expenses. The EDA continues to collect $500 each month for the Wetherell Property. Under `sale of property'is the transfer of the land write down for American Energies. Total expenses for EDA Board Meeting July 22, 2005 Page 2 of 5 June are $10,754. The EDA has spent down a total of $4,958 for the month of June. The EDA has spent down a total of $55,593 for the first six months of 2005. o Pg 4 under the EDA Loan Fund, there is $147,314 as cash on hand. This fund has seen no activity for the month of June. There is the donation to the MCCF for $25,000. o Pg 5 under the EDA Downtown Loan Fund, there is $483,790 as cash on hand. Mortgages receivable is $782,233. $61,852 has been collected this year for loan repayments. A total of $195,380 has been paid out thus far for 2005 including loans, downtown grant program, and miscellaneous. The balance sheet reflects spending down a total of $133,528. M/S /P: Jansick/Stotts to approve June financial statements as presented. Passed unanimously. V. Director's Report Miles Seppelt gave the following report: A. State Theater — Seats are going in right now in the balcony theater. The person that hangs the drapes just started and will have all of those installed by the start of next week. The screens are up and just need the masking around the side. The first movie is still being decided on. The apartments are just about ready. There is a leak on the balcony that needs to get fixed. B. Liquor Hutch — Mr. Seppelt has been sitting in on the construction update meetings. The walls are going up right now. C. Rix Corner Redevelopment — This project will be discussed later. D. Downtown Streetscape Project — The second round of bids are back. There were no irregularities. The bids came in about $43,000 less than last time, with the total project cost being $1,442,000. It will go to City Council for the awarding of the bid August 9th, and the construction will begin 2 -3 weeks after. The goal is still to complete it this year. E. Wetherell Industrial Park — The topsoil is in the process of being removed right now. Fill will be brought over to it as it becomes available from other city projects. Mr. Seppelt is working on getting a sign for Highway 22 and 5th Avenue to better identify the location of the Industrial Park for truck drivers. 3M has problems with trucks finding where they need to go and are interested in this project. He has also talked with Cenex who sounds interested. F. Cenex — No report was given. G. Business Recruitment — The City Attorney is working on drafting the purchase agreement for Company "X." EDA Board Meeting July 22, 2005 Page 3 of 5 VL Grant and Loan Applications Downtown Loan Program $130,000 Cornerstone Commons Bank financing has been approved contingent upon getting the Redevelopment TIF District set up. The Downtown Loan program can do the maximum of $130,000 because this project covers 3 lots. There are a total of seven investors —six of which are putting in the owner equity and the other putting in the time to coordinate the whole project. The TIF District will be taken to City Council for Approval on August 23rd, so the project could begin, pending council approval, on August 24tH Mr. Seppelt stated that the developers would like the 15 -year loan with interest at the locked in prime interest rate. M/S /P: Hoversten /Stotts to approve Downtown Loan of $130,000 for 15 years at prime interest rate. Passed Unanimously. Storefront Revitalization Matching Grant $5,000 Cornerstone Commons M/S /P: Jansick/Ulrich to approve storefront revitalization matching grant for $5,000. Passed Unanimously. Economic Development Loan Program $25,000 Ashwell Industries – Tony Ashwell Mr. Ashwell is working with Citizens Bank. Citizens Bank and SWMF are putting in $82,500 each. Mr. Ashwell is putting in $21,000, and the EDA would provide the Gap financing at $25,000. Mr. Ashwell will be renting space from Dick McClure. The EDA portion of the project would go more towards working capital. Mr. Ashwell has letter of intent from potential customers in the area that would like to use his services. The only employee initially would be Mr. Ashwell. The EDA would take the second position with the machinery being collateral and a personal guarantee. Mr. Hoversten stated that the projections for business are only about 15 hours /week of actually running the machine and that this has good potential because the nearest competitor is in Green Isle, and that company has a different focus than Mr. Ashwell does. Mr. Ashwell does have the option of driving truck as needed at his current position so as to keep income coming in. The other loans being provided have 6 -year terms at 8.25 %. It was suggested that the EDA do the same for their loan. M/S /P: Jansick/Stotts to approve $25,000 Gap Loan for a 6 -year term at 8.25% interest. Passed unanimously with Mr. Ulrich abstaining. EDA Board Meeting July 22, 2005 Page 4 of 5 VII. Revision of Business Subsidy Criteria for JOBZ The new parts of the policy do not change the substance. It just adds the technical language necessary for JOBZ. DEED and the City Attorney looked at the revised policy and stated that it looks good with no changes being needed. Now it just needs approval from the City Council at a public hearing. MIS/P: Jansick/Hoversten to adopt the revised business subsidy policy as written. Passed Unanimously. VIII. Proposal from the Small Business Development Center — Duane Hoversten The SBM is a college program where people sign up for credits. The SBDC is more project related. It has been located at the college for 5 or 6 years, but at one time it was at the City Center. The colleges are not committed to Economic Development issues like they once were, so they won't house the SBDC for much longer. If Duane were to retire, there would be no replacement for him for the SBM or SBDC. The SBDC creates about 1.6 -1.7 jobs for every company it works with. McLeod County has at least 30 businesses a year that work with the SBDC. The cost to the EDA was originally proposed at $10,000. Having the SBCD with the EDA would require the assistant to log clients into the web -based database and assign people to consultants. It was also originally proposed that the EDA would be reimbursed $25/hour, but it would actually be $35/hour for time the assistant puts into this. The EDA would also be reimbursed $35/hour for any time the consultants put into it, but the EDA would only pay the consultants $25/hour, giving the EDA $10/hour for those hours as well. It would require about 15 -20 hours of the assistant's time each month and about 30 hours a month for each of the consultants. The key for SBDC funding is that there needs to be match. There is probably a way for the EDA to break even. Right now a profile is needed for where the revenues falls and try to make it as neutral as possible. Mr. Jansick recommended that the commitment amount from the EDA could change as needed to stay as revenue neutral as possible up to a maximum of $10,000. All of this will be looked at and will be brought back to the Finance Team and EDA Board when it is ready. IX. Chamber CVB Update No Report was given. X. Other Business There was no other business to discuss. EDA Board Meeting July 22, 2005 Page 5 of 5 XI. The next meeting will be August 26, 2005, at 7:00am. XII. Adjourn The meeting adjourned at 7:59 am. Respectfully submitted, Erin Eberdt EDA Assistant